Social Status Pays
Independent pet retailers have yet another reason to develop their presence on social media—it may actually help them secure some much-needed capital.
Last week, I read this report from The New York Times, which discussed the experience that Windy City Parrot—a Chicago-based bird specialty store/online retailer—had with an alternative lender called Kabbage. After proving unable to secure a loan with traditional banks (even with the assistance of the Small Business Administration), Windy City Parrot owner Mitch Rezman turned to Kabbage, which specializes in extending short-term lines of credit to small- and medium-size retailers.
Considering how tight the credit market is today, it's not particularly surprising that Rezman (whose business projects less than $500,000 in revenue for 2013) ended up going to an alternative lender—many business owners in similar situations do the same thing every day. What I did find surprising is how Kabbage looks beyond an applicant's credit report to consider factors such as the business' social media presence—including how many "likes" or "followers" it has, how often it posts on social media, and how often its posts elicit comments—when deciding whether or not to extend a line of credit. In the report from The New York Times, CEO Rob Frohwein says that Kabbage uses its focus on social media to "get a 360-degree view of a small business..."
Now, I'm not a particular advocate of alternative lenders—if you ask me, the relatively high interest rates offered by these organizations can be quite dangerous. However, I suspect that this is just the tip of the iceberg when it comes to the influence that social media will have in measuring the potential of a business—particularly a retail business. It has already been well publicized in the media that more and more employers are looking closely at the social media presence of potential job candidates, and it stands to reason that lendors will increasingly follow suit. After all, when you're putting your business on the line—whether in the form of money being lent or the reputation being conveyed by an employee—you want as much information as possible at your disposal before making a decision.
With that said, the time for retailers to say, "I'll worry about social media tomorrow," is over. Tomorrow is here, and the cost of ignoring social media is just too high, regardless of your credit rating.